June 8, 2010

To be sure, none of the eight questions specifically challenge the political sensibilities of conservatives and libertarians. Still, not all of the eight questions are tied directly...

... directly...

...to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.

Yes. Some of the dumbest people I have ever had to do business with are liberals. Frankly, I tend to steer those types to other advisors. They are more trouble than they are worth.

And apologies to those who may be or are related to: Generally, elementary and secondary general education teachers are the worst.

Trying to explain basic general market principles, the dynamics of bonds in relation to interest rate fluctuations, or international bond fund in relation to currency exchange rates and the current issues with the euro and credit ratings of countries and so on.....might as well be reading War and Peace to my cat.

They want to invest according to a pre-concieved pie in the sky, unicorns and rainbows theory. They also then want to blame me when their investment plan (inexplicably to them) doesn't turn out the way they envisioned it.

Well as we're watching Europe slowly fall into an economic abyss based upon the liberal/progressive notion that the state can pay for pretty much everything (despite sky high tax rates) I'd say liberals don't know jack about economics.

And yes, our own here in the US are steaming us right toward the same waterfall. Thanks guys.

One problem is that economics is an inexact science - you can predict trends but you cannot predict specific events. And like all statistic based sciences - you can always find a point that while highly improbable, does occur. So when someone reads the question - they think of a specific example instead of trying to see the larger, more valid distribution.

It seems that their answers reflect more of how they want the world to be - fair to all with rainbows and unicorns - than how it actually behaves.

I think it's a "gotcha" test for liberals. I think that many of those questions knew full well what the answer was, but automatically refuse to supply any answer that might count as an argument against their position. Someone who knows that licensing increases prices, but who likes licensing, is inclined to answer that they disagree not because of any haggling over "significance" but because they have learned to deny any fact that might be used against them politically.

So in those cases where the test isn't actually measuring economic illiteracy, it's measuring intellectual dishonesty.

Questions 5 and 6 could be interpreted differently, but the others are unbiased.

("5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree).")

5) Depends on what you mean by "exploited". Working for a capitalist = exploitation by definition for socialists.6) Global free trade does in fact result in some unemployment for some people whose work is displaced, but employment overall improves.

But liberals generally seem to believe that endless spending by government and endless taxes of business and citizens need have no ceiling, and that it will all work out for the best.

And the related misunderstanding of economics...if you tax something, you not only get less of it, you lose that budget crutch subsequently.

For example, when they heavily tax tobacco or gambling in order to get people to quit, but then rely heavily on those revenues, it becomes an Oroboros exercise in misunderstanding or, worse, unwillingness to understand.

It's fair to say that liberals do poorly in areas like economics. However, this is not an area in which they have much interest. If the quiz were on music and naming early Rolling Stones hits, I'm sure liberals would be the smart group.

Economics, like constitutional theories, comes in different flavors. The article is talking about classical, market-based economics. That may have been where liberalism came from, but after internalizing a heavy dose of Marxist-inspired criticism of markets, it's not where today's liberalism has ended up. Liberalism today is all about government-directed ("socially controlled") systems, where the choices open to market participants are constrained and and in some segments of the economy (as in employment/retirement matters and now health care) replaced when gov't assumes a dominant role in imposing required arrangments and allocating goods and services. Market imperfections, externalities and the like are what today's liberal is likely to focus on, and the liberal's solution will almost never be to find a market mechanism to internalize the supposed externality.

At bottom liberals have a sense that policies based on an individual's desire to maximize his personal welfare are morally corrupt -- they want people to be motivated by something more altruistic, more socially conscious. That attitude generates lots of fun when, as always happens, even liberals don't live that way -- witness the glee some get from posting pictures of the Goreacle's various mansions and calculating his carbon footprint, for example.

In a sense, the survey is attacking a straw man. Judging by their policy prescriptions, liberals don't really accept classical economics; judging by the way they live, liberals are no different than others in responding to incentives and maximizing personal welfare. That contradiction inherent in liberalism is also the basic reason why so many of their policy prescriptions backfire when reality ultimately intrudes, as it has a habit of doing.

Economics -- the laws of supply and demand and their effects on price in the marketplace -- is a subject that human beings are not evolutionarily adapted to understand. Witness the lack of agreement, even among world-class economists, of the likely effects of NAFTA and GATT on American wages and working conditions (the predictable effects of which would be to increase the available supply of labor relative to capital). Instead of concentrating on fundamentals economists were distracted from the issue of wages by such non-issues as the likely effect on the number of jobs (if markets are flexible the number of jobs should neither increase nor decrease and a one hundred and fifty year old version of the theory of comparative advantage.

Statistics and probability is the other big subject that human beings are not adapted to understand.

I admit that some of the examples DBQ gives (currency exchange rates as they effect international bond funds) are beyond me, but this test was at a much more elementary level than that.

And I agree with John that the liberals' disagreements with obvious economic truths says more about their dishonesty than their ignorance; along the lines of "I know the answer but the agenda trumps the truth."

A while back I had a conversation with an individual who, having been laid-off and receiving unemployment benefits. was conflicted whether to take a rehire job offering or continue with getting 'free money'!!!

She must have had an image of the government having infinite warehouses of unused money laying around.

One could argue that the Gov has ability to create wads of cash but we know sooner or later, one way or the other, it has to be paid for.

I was frankly surprised at how poorly the liberals did. On average, they got over half the questions wrong.

On the other hand, I wasn't surprised, because liberalism (socialism, etc.) is what I call "wishful thinking economics". Good intent is all that matters. But the reality is that good intents, plus maybe $5 or so, will get you coffee at Starbucks. And it may cost even more at a company that only sells fair trade coffee and pays sustainable wages.

On the other hand, it looks to me like the questions were indeed specifically designed to embarrass liberals and their lack of understanding of economics.

The brilliant thing about the survey is that it shows that Liberals respond to surveys in one of 2 ways – they’re either being honest and they truly don't understand the basic principles of reality (not just economics – what’s being described is larger than that) or, more likely, they think they’ve got the researcher and the study figured out and are ham-handedly trying to game the results.

Actually there’s a third option I guess – that the Liberals might not be trying to game the results, but as the article notes, that they’re so blinded by their political ideology or aesthetic preferences that they honestly answer incorrectly.

John said: think that many of those questions knew full well what the answer was, but automatically refuse to supply any answer that might count as an argument against their position. Someone who knows that licensing increases prices, but who likes licensing, is inclined to answer that they disagree not because of any haggling over "significance" but because they have learned to deny any fact that might be used against them politically.

This is why I can't accept the idea that liberals are more "nuanced" or "deeper thinkers." They can't accept that there are pros and cons to so many things. For example, obviously licensing increases prices, but that's not necessarily a bad thing- society is more than happy to accept the trade off of heart surgery being more expensive than it would be if I (not a doctor) were allowed to go around offering it door to door. Hair braiding, eh, not so much.

It's only when you accept the trade-offs that you can understand them enough to apply them towards crafting better policy.

"I admit that some of the examples DBQ gives (currency exchange rates as they effect international bond funds) are beyond me"

I don't expect my prospects or clients to "know" these things. That's MY job to educate them and explain investments and guide them so they can accomplish their goals and feel confident that we know what we are doing (as best we can in a quicksand economic environment like today)

I've been doing this for over 20 years and I'm generally pretty good at getting the concepts across.

If I'm lucky, I get clients who are already versant in economics and investments and I don't have to start out with investing 101 or economics 101. Happy day.

However, I've found that some people (mostly liberals) either CAN'T understand or REFUSE to understand. They have the deer in the headlights look no matter how may ways I try to approach the topics.

I've also learned, the hard way, that it does no good to continue to do business with people who have NO understanding or who refuse to listen to advice because it doesn't agree with their (false) world views.

"Incentives matter....It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. ... the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. ...When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession."

For example, obviously licensing increases prices, but that's not necessarily a bad thing- society is more than happy to accept the trade off of heart surgery being more expensive than it would be if I (not a doctor) were allowed to go around offering it door to door

But that wasn't the question. Whether it was beneficial in the long run to license professionals.

The question was about the economic ramifications.

Of course it is beneficial to license SOME types of professionals. You wouldn't believe the number of licenses I have to carry and the amount of continuing education hours I need to retain those licenses. The licensing and regulations are for the protection of the consumer.

However, the questions are about the economics of licensing.

By NOT licensing every Tom, Dick and Harry perhaps the benefit of having lower costing services would be seen as a plus by the consumer.

In a free market society, we would have the choice: to patronize the beautician who is not licensed or the one who is.

Yes. One of my oldest friends is a die-hard liberal and a medical doctor. He's a very bright guy but doesn't seem to understand that money doesn't come from the government and that government jobs do not have the same economic effect as private industry jobs. He also ascribes selfish motives to private realm, but assumes government is without tainted motive He doesn't understand that government acts on self-interested motives of its own, involving expanding its reach into more areas of the economy.

He may sort of understand these things when I discuss them with him, but then the next time we talk he's back to square one.

First, never forget the old wheeze, "There's no such thing as a poor white liberal" (There are, however, plenty of poor white radicals.). They understand economics as it applies to them, society is another matter.

I don't think they're that stupid, but I do believe their views are tied to their prejudices, which, in turn, are tied to their egos.

A lot of Leftists see themselves as better than everybody else, so they see their views as inherently correct and don't feel they need to justify them. They also have a strong Messiah complex, in that they are forever defending the poor, downtrodden, etc., which makes anyone who disagrees inherently evil to them.

If House is not willing to take the test, it suggests that the answer to John's question (9:46 am) is, economic illiteracy = No, intellectual dishonesty = Yes.

Of course, it may be that House is an unusally smart liberal. We'll need more data. Maybe we can get our other progressive commenters to respond. Although, most don't seem to be commenting on this thread. That, in itself, suggests dishonest over illiteracy.

I look at the survey questions and ask myself: How could anyone strongly agree or strongly disagree with any of them, given that they relate to Economics? One can, I think, find exceptions to almost any rule such that strong agreement/disagreement is a poorly thought-out answer.

I always tend to ignore this kind of "science" whereby people try to prove the other side is stupid, or try to figure out what is mentally wrong with the other side. I think the only one notable about this one is that it is from a conservative p.o.v. which is rare in this genre. usually it is "conservatives didn't have a mother who loved them" or conservatives are knuckle-dragging morons, something like that. the only thing these "scientific" studies do is remind us how often bullshit is dressed up as science.

My grand theory of it all is this. for the most part conservatives are morally oriented thinkers and liberals are not. i am not saying that one is immoral and the other isn't, or that liberals don't care about morality at all. for instance, one issue where liberals get very interested in morality is in anti-discrimination issues. but in general conservatives see the world largely in moral terms, and liberals do not, largely.

its also important for both sides to explain that they are superior in some way. for conservatives, its easy: moral superiority. For liberals, on issues about discrimination, its also easy: moral superiority. but on everything else, because they don't largely see the world in moral terms, they can't describe their own superiority in moral terms, so they are forced to go for something else. One avenue is intelligence and education; i am better than you because i am more educated than you, or just plain smarter. the other is to claim to greater psychological health.

the truth is, however, that psychological health is so subjective the term is almost useless--it certainly doesn't give rise to actual scientific determination. and as for education/intelligence, here is the truth. liberals are more likely to be the most educated, or the least educated. that is they are more likely to have PHD's, or to be high school drop outs. conservatives, meanwhile, are more likely to be high school graduates and/or college graduates. and as if that wasn't confusing enough, the differences are within only one or two percentage points, which means that in all areas the numbers are almost evenly split.

So bottom line, stop trying to study each other like Jane Goodall and her chimps and just try to see where we are coming from.

The problem I had with the survey as described in Klein's article, is that his simple breakdown into "progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian" is too simplistic. I've known people who are very conservative on social issues, but dunces on economic issues. Also I would describe myself as fiscally conservative but socially moderate. Is that too nuanced for Prof. Klein?

I took the paragraph that begins "To be sure, none of the eight questions ..." as nothing more than Klein's efforts to keep from being run off campus on a rail -- or being hung in effigy just as soon as the liberal humanities professors can locate a city named "Effigy" somewhere on a map. Despite this wishy-washy paragraph, Klein's bottom line is that the more liberal you are, the less likely you are to understand elementary economics.

That wouldn't perhaps touch a little close to home for a university professor on a far-left campus in a blue state, would it, Professor Althouse?

The only remaining question is a chicken-and-egg question. Are people liberals because they don't understand elementary economics? Or don't they understand elementary economics because they are hard core liberals and decline to learn things that contravene their beliefs?

To the extent that it's the former, perhaps liberals can be educated. If the latter then they cannot be educated, merely suppressed.

I would be interested to hear some lib/prog explain why the correct answers are incorrect. Start with one question/answer.

Well here's a thinking liberal's (and it should be a thinking conservative's) response to one statement:

"Restrictions on housing development make housing less affordable."

What kind of bullshit question is that? What kind of restriction? Obviously if you restrict development to one acre lots and minimum 3500 square ft. houses, then it is going to make housing less affordable. But restrictions that are targeted and properly designed to make housing more affordable and encourage mixed use and denser development can be effective.

What you mean I have to answer "1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure."? It's not that simple.

Of course it is beneficial to license SOME types of professionals. You wouldn't believe the number of licenses I have to carry and the amount of continuing education hours I need to retain those licenses.

Yet you still don't understand, or willfully misrepresent, such simple concepts as a progressive income tax and believe that Ireland has a lower overall tax rate than the U.S.

My grand theory of it all is this. for the most part conservatives are morally oriented thinkers and liberals are not.

Perhaps a more accurate statement would be that conservatives acknowledge the dynamic role of the individual drive toward one's own needs/wants. Liberals tend to discount that due to a collective or social way of looking at things or, possible, because they judge any self-centered motivations as fundamentally wrong. This last, of course, exists despite literal mountains of data of self-centered behavior in the natural world by all forms of life, "intelligent" or not.

I've always felt that conservatism acknowledges that people are self-centered and tries to harness that axiomatic truth. I've likewise always felt that liberalism expects everyone to act in a manner they would deem rationally and maturely (ie collectively and for the good of all members even at the detriment of the self).

I've leaned far more conservative in my life because it has always seemed to describe the real world better. The liberal version relies far too much on that razor-thin vaneer that we call civilization.

How do you make housing more affordable? Without restrictions or govt subsidies?

First off, there is no such thing in a modern society as housing without restrictions or government subsidies. So the entire premise of the question is bullshit to begin with.

Government decides where the roads, sewers, and water supplies go. Even utilities traditionally provided by private companies in this country (gas, electricity, phone, etc.) rely on government to define their right-of-ways and easements so they can deliver their services. Those are all forms of restrictions and subsidies. Same with education. So even if you live in an area without zoning or "restrictions" on building, there are of course still restrictions on housing development.

You once claimed you would move there because they had a lower tax burden than the U.S. Of course, you apparently got the information from the monkey tax advisors that fly out of your butt rather than doing a little basic research.

He's a very bright guy but doesn't seem to understand that money doesn't come from the government and that government jobs do not have the same economic effect as private industry jobs.

This seems to be a common delusion among the liberals I know.

I agree the test/survey is not very impressive and hardly a conclusive indictment of liberals' economic intelligence. The actual proof, however, is all around us. It is very common to find liberals who do not understand that gov't's money comes from taxpayers, or that gov't jobs must be funded by taxes created by private jobs. Or liberals who think rent control helps the poor or that the economy would be great if we levied punitive taxes on corporations and rich people. Heck, the hardest thing to convince liberals is trickle-down is indeed a real thing. I don't know how you can't see this, unless you think people stuff their money under their mattresses.

But restrictions that are targeted and properly designed to make housing more affordable and encourage mixed use and denser development can be effective.

A thesis statement, only.

Flesh out with hypotheses and evidence please.

EXACTLY what kind of "restrictions" make housing MORE affordable? Where have these restrictions been used to make housing more affordable?

Restrictions on lot size, green space, and the like may have POSITIVE benefits, Planning and Zoning, Code Enforcement, and Nuisance Codes may all make for a more livable community, but they do NOT make for a more affordable one. As someone said upthread, these are economic questions, with economic consequences, but not all consequences are ECONOMIC. One might adopt certain ordinances that have aversive economic consequences, in order to further other, non-economic, goals. However, many traditional housing restrictions, whilst serving existing home owners, do not make housing more affordable.

First off, there is no such thing in a modern society as housing without restrictions or government subsidies. So the entire premise of the question is bullshit to begin with.

It doesn't strike me as bullshit at all. The above statement about it, though, strikes me as an illustration of the misunderstanding between limited government and no government. Conservatives, and libertarians in particular, do not call for NO regulations. They call for less or minimal regulations and strong oversight on those that are innacted. To move further right of that position is to get into anarchy territory.

Staring from absolute zero regulation, any and every regulation you place on the construction of a dwelling will increase it's cost at some point in the cycle. How is that a bullshit question? You are putting additional, artificial ingrediants into the construction of a dwelling. Artificial in the sense that a well-built home, by carpentry standards, is exactly the same whether it lives up to "code" or not.

First off, there is no such thing in a modern society as housing without restrictions or government subsidies. So the entire premise of the question is bullshit to begin with.Sorry you made a claim, now justify it. And no sewer and water are NOT subsidies, you pay for them, via taxes and subscription fees. They are most decidedly NOT subsidies.

Now you claim well thought out restrictions make home ownership more affordable. Prove o it or please shut up about it.

EXACTLY what kind of "restrictions" make housing MORE affordable? Where have these restrictions been used to make housing more affordable?

The statement was "restrictions on housing development make it less affordable". On its face the truth of this statement cannot be judged because the type of restrictions are not specified. My point is proven.

I call bogus the entire study. It is entirely political. FWIW I would ace that survey, but I know for a fact I have an empty spot in my brain where economics should reside. An aunt spent my childhood trying to explain bonds to me and it never took. Economics, as taught to me, struck me as a skewed application of math.

The statement was "restrictions on housing development make it less affordable". On its face the truth of this statement cannot be judged because the type of restrictions are not specified. My point is proven.

Ah, the science is settle, then, is it, Algore? Isn't housing, like anything in the market, susceptible to supply and demand forces? Restrictions on a thing reduce the availability on that thing. Reduced availability on a thing makes it more expensive. The type of restriction doesn't matter.

It doesn't strike me as bullshit at all. The above statement about it, though, strikes me as an illustration of the misunderstanding between limited government and no government.

Because the statement the person is asked to judge does not explain what is meant by "restrictions".

And that is my point. I would ask the pollster, "could you please explain what you mean by restrictions". Restrictions can actually lower the cost of housing if the restriction is you have to build 5 houses per acre in an area where traditionally the houses are on half acre lots.

No they don't. Restrictions include requiring you to paint your house white, have a sewer hookup as opposed to a septic tank, not keep chickens in your yard, or not park cars on your lawn. They do not necessarily reduce the availability of housing.

Obviously, for all your supposed economic brilliance, it is you conservatives who need some schooling in basic legal and real estate concepts

I freely admit that we are horrible at understanding Republican economics even though it is 1 sentence (Cut all taxes for the wealthy and let the poor kids starve) repeated over and over, paragraph after paragraph, page after page, chapter after chapter, volume after volume....

Restrictions include requiring you to paint your house white, have a sewer hookup as opposed to a septic tank, not keep chickens in your yard, or not park cars on your lawn. They do not necessarily reduce the availability of housing.

Actually they can….So please demonstrate how these restrictions can make housing MORE affordable. They can have other positive benefits, but more affordability is not, necessarily, one of them.

So demonstrate your economic brilliance for us Freder and demonstrate, with real world examples how they can be sued to make housing more affordable.

No they don't. Restrictions include requiring you to paint your house white, have a sewer hookup as opposed to a septic tank, not keep chickens in your yard, or not park cars on your lawn. They do not necessarily reduce the availability of housing.

Painting your house is an expense = more expensive. Having a sewer hookup when you have a septic = expense = more outlay. Not keeping chickens if I already had chickens = expense because now I have to go buy chickens instead of raise and eat them. Not parking cars in a lawn is a parking restriction not a housing restriction to do with housing.

We can do this all day. Frankly, I thought we were discussion construction, so my point as far as that goes remains valid.

Sorry, I should have been clearer. It is self evident if you are not a moron.

Well please explain to this moron, how it is evident. IF it’s so obvious, then you should be able to find Real World examples where housing restrictions have made for more affordable housing.

freely admit that we are horrible at understanding Republican economics even though it is 1 sentence (Cut all taxes for the wealthy and let the poor kids starve) repeated over and over, paragraph after paragraph, page after page, chapter after chapter, volume after volume....

So the poverty is in the Capitalist World, then, not the Socialist World? And the fact that the “walthy” pay more taxes than the poor is something you are unaware of? Or that the percentage of taxes paid by the wealthy went up under Bush?

I freely admit that we are horrible at understanding Republican economics even though it is 1 sentence (Cut all taxes for the wealthy and let the poor kids starve) repeated over and over, paragraph after paragraph, page after page, chapter after chapter, volume after volume....

Ahh...the don't-end-welfare argument circa '95. That didn't work out quite like your side thought, huh?

Besides...what's worse (assuming your worst-case scenario)? Hungry kids with safety nets and limits on benefits or generations of unaccountable people growing up in institutionalized poverty and the destruction of their families?

please demonstrate how these restrictions can make housing MORE affordable.

(These restrictions = require plumbing, etc.).

Why are you compartmentalizing expenses like this? If you buy a house that is cheaper because it has no sewer hookup -- like all the houses in your neighborhood -- but spend a lot of time sick with dysentery or cholera -- have you saved money? Or if you don't have to throw away your trash, and just put it in the dump out back, and therefore have rats and rat-borne diseases, have you saved money? Or have a cesspool and resultant mosquito-borne diseases -- have you saved money?

Extreme examples, I admit, but things I think about when I see such questions as in the survey.

So demonstrate your economic brilliance for us Freder and demonstrate, with real world examples how they can be sued to make housing more affordable.

I didn't say anything of the sort. I used those examples as types of restrictions that do not have an impact on the availability of housing (either up or down). ScottM erroneously believes that restrictions reduce the availability of a thing. This is not necessarily the case. In fact restricting through standardization often vastly increases the availability of an item.

Why are you compartmentalizing expenses like this? If you buy a house that is cheaper because it has no sewer hookup -- like all the houses in your neighborhood -- but spend a lot of time sick with dysentery or cholera -- have you saved money? Or if you don't have to throw away your trash, and just put it in the dump out back, and therefore have rats and rat-borne diseases, have you saved money? Or have a cesspool and resultant mosquito-borne diseases -- have you saved money?

OTOH, requiring a sewer hook-up on a 50 hectare farm IS an economic cost…..so I ask again, demonstrate real-world examples of restrictions making housing MORE affordable. California isn’t going to be one and neither is NYC. Most “smart growth” or “New Urbanism” won’t create greater affordability. MOST restrictions, indeed, RESTRICT, the housing stock, making housing, on the whole, MORE expensive, and less “affordable.” In the case of Cali., until the latest bust, the restrictions benefitted existing home owners, by making their homes ever more valuable, by restricting supply I n the face of increasing demand.

This is not necessarily the case. In fact restricting through standardization often vastly increases the availability of an item.

Leading to complaints of “Cookie-cutter” development….and limiting home-owner choice does not, necessarily, make housing more affordable, if people don’t buy it….unless you MANDATE they buy the cookie-cutter homes, because they’re good for you, or the environment, or society or something.

well if this has been repeated over and over again, you shouldn't have any problems finding documentation showing republicans support cutting all taxes for the wealthy and letting poor kids starve. I will wait.

In a qualifier exam, you usually know what the Department is driving at. Well, at the least, you better, or your Major Professor has screwed you over (In my department we had Major Profs before we took the Qualifier, typically working on their grant, so it was really in their best interest that you passed).

The problem when I see a survey question is that I try to figure out the political slant from which the questions are being asked. And that leads me to sometimes wild hypotheticals.

Freder, Madison this is not difficult, you should be able to point to Port OR or Reston VA and make your cases.....Point to Cali, or NYC. I forget the name of the town, in real life, but the "Truman Show" town is an actual, existing, New Urbanist creation, you could use that as example....

I am waiting for real-life examples of housing restrictions, that actually make housing more affordable.

Freder made an assertion, all s/he needs to do is provide some evidence to back up the assertion.

If you read Thomas Sowell's book Basic Economics, you'll come across in Chapter 2 an anecdote that Sowell imparts about an exchange that is said to have taken place between Thatcher and Gorbachev about Britain's economy:

"How an incredibly complex, high-tech economy can operate without any central direction is baffling to many. The last President of the Soviet Union, Mikhail Gorbachev is said to have asked British Prime Minister Margaret Thatcher: How do you see to it that people get food? The answer was that she didn't. Prices did that. Moreover, the British people were better fed than those in the Soviet Union, even though the British have not produced enough food to feed themselves in more than century. Prices bring them from other countries."

It's somewhat understandable that Gorbachev would know nothing about the role prices play in free market economies since his only experience was with a centrally controlled economy.

But it's unfathomable that American progressives and liberals lack even a basic understanding of how a free market economy works when they have been marinated in one their entire lives. At least until Obama came to town and began dismantling it.

It depends on where you are in the infamous Laffer Curve. If you have a 5% income tax, and raise it to 6%, you are likely to increase tax revenues. Maybe even 10%. But if you have a 40% tax rate and increase it to 50%, I think it likely that revenues will fall. And, if you are at 60% and raise it to 80%, tax revenues are going to crash.

Statement: Returning to a gold standard will eliminate inflation and stabilize interest rates.

I would suggest deflation as a result. Remember MV=PQ, and if M (Money supply) cannot rise, then P (Prices) has to drop so that Q (nominal GDP) can rise.

The problem right now is that the Fed has lost track of this, and seems to be back to concentrating on interest rates, which is what they did before Reagan (actually, the last little bit of Carter). In the above equation, V (Velocity of Money) dropped significantly in the last two years as a result of the banking crisis, and so they compensated by cranking up money supply growth. But what happens when velocity rebounds?

The reason that some conservatives likely want to go back to the gold standard is that it would prevent the Fed from playing games with the money supply, which in the long run is not a good thing.

What I think Freder is saying is that when you make a blanket statement like that, there are plenty of exceptions. Thus, for example, his painting the houses white. You have to paint them some color, and so mandating white does not cost anything.

What a lot here were trying to do was have him prove that regulations can bring down costs or make housing more affordable, which is what was implied by the original question, but not what he was saying. Rather than showing that there were regulations that could increase the affordability of housing, instead he merely showed that there were regulations that would not make housing less affordable.

Freder made an assertion, all s/he needs to do is provide some evidence to back up the assertion.

Actually, the concept was and I think still is, incorporated in the New Jersey State Constitution through the Mt. Laurel series of cases which limited exclusionary zoning (zoning that sets minimum lot or square footage).

What about the TVA, the Bureau of Reclamation, the BLM, the MMS, or the Postal Service?"

Which of those are actually self-sustaining? Shoot, most of those are just regulatory agencies. Yeah, if you want to say that they're self-sustaining because they collect revenues through their regulatory function, sure. By that measure, the IRS is the most successful operation on the planet.

In general though, the gov't doesn't operate in activities that generate profit, because private businesses would logically jump in whenever there's money to be made.

'Reagan biographer Lou Cannon conceded, "Reagan would be hard pressed to get nominated today. Today he would not be in the conservative mainstream. He just simply would not be."'

And....

"once in the White House, Reagan grew the size of government, tripled the deficit, raised taxes in seven of his eight years in office, supported the Brady Bill gun-control proposal, negotiated with an "evil empire" that had vowed to wipe the U.S. off the map, and cut and ran from Beirut."

'Of course, it's not just California Republicans. Newsweek's Andrew Romano recently noted, "[T]he GOP has drifted so far right that it's retroactively disqualified the only Republicans since 1960 who've actually managed to, you know, win national elections." Reagan, Romano added wouldn't "come close to satisfying the Republican base" if he ran today.'

Actually, the concept was and I think still is, incorporated in the New Jersey State Constitution through the Mt. Laurel series of cases which limited exclusionary zoning (zoning that sets minimum lot or square footage).

And it affects housing costs, HOW? Now we’re getting somewhere.

Rather than showing that there were regulations that could increase the affordability of housing, instead he merely showed that there were regulations that would not make housing less affordable.

No he said certain restrictions on housing could reduce the cost of housing and make it more affordable. I merely asked him/her to provide evidence of that assertion.

And NO, houses don’t HAVE to be painted…brick, adobe, concrete and the like…so a painting requirement DOES increase costs. Now it may seem silly and picking at nits, but Freder has made acclaim. All I’m asking is that Freder justify the claim. It’s a vast nation, I’ve given him/her hints…simply point out were land use restrictions, green space requirements, environmental offsets or any other form of restriction has ACTUALLY, as opposed to THEORETICALLY made housing more “affordable.” And affordable means without subsidy….and I’ve addressed the idea of utilities, provided by the government, as a subsidy-they are not.

'Reagan biographer Lou Cannon conceded, "Reagan would be hard pressed to get nominated today. Today he would not be in the conservative mainstream. He just simply would not be."'

The Reagan of 1980 was constrained by the Keynesian PoV of the times….the Reagan of 2012 might support School Vouchers, and massive government reduction. It is a tribute to the Gipper that he moved the US further to the Right, not an indictment of the GOP.

Original Mike said (in response to my suggestion that the questions should have been "always true" instead of "strongly agree"): Only if you employ the usual liberal strawman that that conservatives believe in NO restrictions, NO licensing, etc. But virtually nobody considers that the baseline.

No, I don't think that follows at all. I'm not even sure why you put those two things (my suggestion and the strawman argument) together.

Bush saw a REAL INCREASE in net employment, and Obama has seen a REAL DECREASE in employment...

There fewer jobs and workers now than under Bush.

Now I realize you're going to blame Bush and the GOP for that, but I will point out that the massive "Stimulus Package" was DESIGNED to prevent unemplyment from exceeding 8%. So we passed it and unemployment is about 10%, heckuvva job, there barry.

The smoke and mirrors in AL's stuff there is that he (or really Krugman) is attributing the recession that Clinton bequeath Bush on Bush, but then refuses to take responsibility for Obama's recession. And, of course, ignores that spending under Clinton was constrained by a Republican Congress, while the last two years of Bush were constrained by a Democratic Congress. And where do spending bills start? Hint - it isn't the White House.

So, AL's point is deceptive both from the point of view of who was responsible for government spending, and who was responsible for recessions.

And linking to former Enron advisor Krugman is not persuasive - this is the same guy who is trying to tell us that a 10% unemployment rate isn't high enough, that the porkulus stimulus plan wasn't big enough, and maybe we need 12% or more unemployment. (Ok, he didn't include those unemployment figures, rather, that is the natural corollary of his Keynesian economics).

And if National Income is 19.2 Billion dollars a day, will the country EVER become insolvent? I object to both GOP/Democrat/Liberal/Conservatives who use a single statistic to “prove” anything. A number is pretty much meaningless unless taken in comparison to some other set of numbers. Saying Barak has saved or created 2 million jobs is meaningless unless you can compare the TOTAL number of Jobs available on 19 Jan 2009 to the CURRENT number of jobs. So too, spending per day figures, without any reference to National Income. It’s like people who want “money out of politics” like to point out that the US spent “X” dollars in the 2008 Election Cycle, they conveniently neglect to point out that Americans generally spend about 2-3 times “X” on Pizza in the same time frame. Sorry just throwing a big number around without any comparison is just dishonest. I don’t care if you’re HDHouse or a Conservative.

Saying Barak has saved or created 2 million jobs is meaningless unless you can compare the TOTAL number of Jobs available on 19 Jan 2009 to the CURRENT number of jobs.

Also keep in mind that the number of jobs "saved or created" by the "stimulus" bills included a lot of raises for government workers, on the assumption that they would have quit otherwise. Many of the rest were make work.

Mr. Bush's last budget called for a daily spend of about $8.4 billion. Mr. Obama's spend is about $9.8 while Mr. Bush spent at the rate of $8.5 billion a day. The major increase in Obama's first budget comes from the stimulas package. Otherwise 2009 (Bush's budget for 2009 was passed in 2008) and Obama's 2010 budget are virtually flat expect for this expenditure. Discretionary spending is up 3.7% and that is bothersome.

The problem is revenues. This year the revenues are to be aboug $2.4 billion as opposed to $2.8 last year. Corporate tax revenues are 2/3rds of 2009 and the overall percentage of corporate tax share is UNDER 10%.

You see Joe joe joe joe joe (there you go again) corporations don't really have a huge tax burden...it is on average far below the average tax rate, there isn't a huge difference year on year except for 1 time only special events and the revenue shrinkage is the biggest single issue other than the stimulas package. Well putting the various Bush WARS on the balance sheet instead of hiding them has something to do with this too.

So Joe joe joe joe joe (there you go again)...try some facts for a change...they might be bothersome but you won't get taken out back to the woodshed every time.

Mr. Bush's last budget called for a daily spend of about $8.4 billion. Mr. Obama's spend is about $9.8 while Mr. Bush spent at the rate of $8.5 billion a day. The major increase in Obama's first budget comes from the stimulas package. Otherwise 2009 (Bush's budget for 2009 was passed in 2008) and Obama's 2010 budget are virtually flat expect for this expenditure. Discretionary spending is up 3.7% and that is bothersome.

HD, there are some errors in your facts as well.

1. Congress rejected the Bush Budget for 2009.

2. they refused to send him their 2009 budget because it had large spending increases and they thought he'd veto.

3. Bush's 2009 budget was not passed in 2008. It was signed by Obama in 2009 after Pelosi was sure that all the spending they wanted was added in, but blamed on the bad bad Bush.

AlphaLiberal said... You guys had the run of the show for 8 years. Over those 8 years the nation was far worse off than when you started.

Who's 'you guys'? I'm a conservative and despised Bush for his misbegotten progressive ideas like No Child Left Behind, democratizing the Middle East, amnesty for illegals and open borders with Mexico, lower lending thresh-holds to promote Hispanic home ownership, and spending tons of money we don't have.

The Tea Party movement is an attempt to reform the Republican Party and get rid of the RINOs. We don't want another Bush-type presidency.

The major increase in Obama's first budget comes from the stimulas package.

Yeh, let's just pretend that the Democrats, led by President Obama, let the financial crisis go to waste and didn't add most of a billion dollars to the deficit primarily to pay off political supporters, notably government employees, in make-work jobs, in one-time tax refunds mostly to people who don't pay income taxes, etc. And then, let's pretend that giving government workers raises somehow creates or saves jobs.

I think most here would love to see a 6% tax rate. And that is part of the point, that a tax rate that low does not have a disincentive affect, whereas tax rates as we are likely to see by the end of the year (absent renewal of the Bush tax cuts) obviously do.

"On February 4, 2008, President George W. Bush submitted (as is customary for a president to do so) a budget request to the U.S. Congress for fiscal year (FY) 2009. It would amount to $3.1 trillion in federal spending, and trim spending on several domestic programs while eliminating others. In addition, his proposal would make permanent the tax cuts passed during his first term and increase defense spending by 5 percent" from budgetwatch.

The amount passed was 3.18 trillion I believe..about what Mr. Bush originally proposed.

Please remember that the federal budget is proposed 7-8 months before the beginning of the federal fiscal year (4th quarter 2008-3rd qtr. 2009).

As to the crap about "federal pay raises"...the amount of raise was 2%. Inflation. End that nonsense.

Liberals might be terrible at understanding economics but conservatives are even worse about lying about it.

Yeh, let's just pretend that the Democrats, led by President Obama, let the financial crisis go to waste and didn't add most of a trillion dollars to the deficit primarily to pay off political supporters,...

I have joined this late but want to congratulate Freder for illustrating with stunning accuracy the subject of this thread. It is quite thrilling to see someone flounder so spectacularly with a concept. Thanks, again, for brightening my day. I am sure I am not the only one.

"If you have a 5% income tax, and raise it to 6%, you are likely to increase tax revenues."

Maybe. I don't think that raising income taxes compels people to earn less, but it does incentivize people to seek out ways to make their income non-taxable. Raising the top marginal rate to 60% or more (as many on the Left suggest), would likely create a mad rush to convert compensation into non-taxable events. I'm sure charities would love the outcome.

hey Bruce, that was the wall street and banking bailout...remember? Paulson? ring a bell? 700 billion without a receipt? AIG...just raise your hand if I hit on anything you remember...don't be shy..just shout it right out.

I just got off the plane and see that HD House has joined the action and has confirmed what Freder has already confirmed. But with that particular form of wit and cutting commentary that is available only to those who think that living on the east end of the long island is axiomatically a sign of superior intelligence. How rich the rewards of this thread. How ample the evidence of confusion and rhetorical incompetence.

Maybe. I don't think that raising income taxes compels people to earn less, but it does incentivize people to seek out ways to make their income non-taxable. Raising the top marginal rate to 60% or more (as many on the Left suggest), would likely create a mad rush to convert compensation into non-taxable events. I'm sure charities would love the outcome.

Actually, many (obviously not all) people work less when the taxes they face get to a certain point. I know I do. And, maybe worse, businesses don't invest when taxes make the business unprofitable.

BTW, the 5% to 6% rates were picked because I think that even the most aggressive conservative economist would admit that there is likely no disincentive affect at those tax rates.

Maybe. I don't think that raising income taxes compels people to earn less, but it does incentivize people to seek out ways to make their income non-taxable. Raising the top marginal rate to 60% or more (as many on the Left suggest), would likely create a mad rush to convert compensation into non-taxable events. I'm sure charities would love the outcome.

Actually, many (obviously not all) people work less when the taxes they face get to a certain point. I know I do. And, maybe worse, businesses don't invest when taxes make the business unprofitable.

BTW, the 5% to 6% rates were picked because I think that even the most aggressive conservative economist would admit that there is likely no disincentive affect at those tax rates.

But restrictions that are targeted and properly designed to make housing more affordable and encourage mixed use and denser development can be effective.

I know this is a late and repetitive comment but it sure would be nice to hear of an example where this is true.

I too would like to see documented proof of this. Right now, it just seems like the usual wishful thinking economics that I mentioned at the top of this thread.

Does it make sense?

I don't think so. Yes, on some projects, the added regulations would not push the profitability of the project below the break even point, and thus the developer could afford to build subject to those regulations, and at that level, maybe more affordable might be built.

But that is only one project, and what is important is looking at all potential projects, and raising the cost through regulation is going to push some projects below break even (computed using an appropriate risk factor cost of capital). And those won't be built.

The poster there seems to be assuming that regulators can better determine what the best use of a developer's money is, and that is problematic, since, for one thing, he doesn't have any real skin in the game. He has no real financial incentive to get the decision right, as compared to the developer, who does. And note that developers who guess wrong, don't last (as is obvious right now with the housing crash).

Michael said..."How ample the evidence of confusion and rhetorical incompetence."

Don't be so hard on yourself Michael. As you just got off the plane (and not off the turnip turnip truck so to speak..or did you?) we will extend to you the forgiveness that jet lag has played a part in your nonsense.

On "restrictions" meaning you must build more house than "traditionally" exist, the point would be that if there were no restrictions, you could build sleeping capsules ala Japan for the proles or tent cities for immigrant labor. They would definitely be cheaper than your mandated 5 houses per acre, no? So you see, in your example, no restrictions can be even cheaper than your restriction.

Also, if you did not have a straight answer because it could go either way, you could answer I DON'T KNOW which they did not count as a wrong answer.

You treat classical economics as if it is something that makes it nonexistent if you choose to disbelieve in it. I don't accept gravity but that doesn't let me fly like a pixie. Its not a straw man if its an iron clad law of nature, and liberals cannot avoid the invisible hand just by wishing it away.